What is FCNR Account: Meaning and Features

A Foreign Currency Non-Resident Account or FCNR Account is a type of bank account that NRIs can use to keep their money in foreign currencies. If you want to understand the FCNR Account meaning, it is a Non-Resident Indians (NRI) Account that allows you to keep your foreign currency for a fixed tenure.

In this article, we will discuss these questions and other related aspects of FCNR Accounts.

What is an FCNR Account?

The full form of FCNR is Foreign Currency Non-Resident Account. It is a fixed-tenure deposit account that can hold different global currencies. This account provides several benefits for managing foreign incomes and saving interest amounts. For this reason, the FCNR Account is of significant interest to NRIs, Overseas Citizens of India (OCIs) and Persons of Indian Origin (PIOs). So, this answers what is an FCNR Account, or what is FCNR?

What are the Features of FCNR Account?

FCNR Accounts offer a range of features, including auto-renewal, tax benefits and loan options, which make them an attractive choice for Indians who have foreign income or incomes in foreign currencies.

Here are a few FCNR Account benefits for Indians residing in a foreign country:

1. Hassle-free renewal

FCNR Accounts usually offer the option of automatic renewal after the expiry of the account's tenure. You can make specific changes for renewal. Banks also provide many customisation options to suit the varying needs of NRI customers.

2. Tax benefits

Another significant benefit of having an FCNR Account is the tax relief it provides. The interest earned on FCNR Accounts is non-taxable in India, which means you can earn interest income on your principal amount without the burden of taxes.

3. Quick processing

The process of opening an FCNR Account is relatively simple. Most documents can be submitted and verified online. The entire process is designed to facilitate smooth and quick financial transactions from anywhere in the world.

4. Attractive loan options

The foreign currency amount in FCNR Accounts can be used as collateral to apply for easy loans from Indian banks. It makes it easier for people to obtain cash against their foreign currency holdings.

5. Easy movement

FCNR Accounts are fully repatriable. It means you can quickly transfer your principal amount and interest from an FCNR Account to your foreign bank account and vice-versa. This feature allows easy movement and foreign fund management for people outside India. Are you wondering how to transfer money to the FCNR Account? You should visit your nearest bank branch for detailed information on this subject.

Axis Bank, for example, offers competitive FCNR deposits in six major currencies - USD, EUR, GBP, CAD, SGD and AUD - for 1 to 5 years, with attractive interest rates.

Here are some key features of Axis Bank FCNR deposits:

Flexible tenure: Choose a deposit term between 1 and 5 years to suit your financial goals.
Multiple funding options: Conveniently deposit funds through foreign inward remittance, traveller's cheques or personal foreign currency tender.
Controlled access: Enjoy partial withdrawals in certain currencies without penalty within specified limits.

Please visit the Axis Bank website or consult a financial advisor for detailed information on interest rates, fees and complete terms and conditions.

Differences between FCNR Accounts and NRE Accounts

NRE Account stands for Non-Resident External Account. Both FCNR and NRE Accounts are used by Indians residing abroad to maintain their finances. However, these two accounts differ based on accepted currencies, taxation and account type.

Let us learn about the differences between these two types of bank accounts.

1. Currency

A primary difference between NRE and FCNR Accounts is the currencies they accept.

NRE Accounts only allow Indian Rupees (INR) as the acceptable currency. In this type of account, money can be repatriated as a foreign currency but is converted to INR using the applicable exchange rates.

An FCNR Account is used to hold foreign currencies in an Indian account. Hence, money can be maintained in any of the eight foreign currencies accepted by the RBI. These currencies include the United States Dollar (USD), British Pound Sterling (GBP), Australian Dollar (AUD), Singapore Dollar (SGD), Canadian Dollar (CAD), Swiss Franc (CHF), Euro (EUR) and Japanese Yen (JPY).

2. Repatriability

Both FCNR and NRE Accounts are fully repatriable. It implies that the principal amount and the earned interest can be moved to another bank account without restrictions.

3. Account type

FCNR Accounts are Fixed Deposit Accounts with a predefined tenure. You can choose a suitable tenure according to your needs and set up an automatic renewal process.

On the other hand, NRE Accounts allow you the flexibility to open a Savings, Current or Fixed Deposit Account. This makes NRE Accounts relatively more versatile in meeting customers' needs.

Taxation

The interest earned on the principal amount is tax-free for NRE and FCNR Accounts.

This feature makes these bank accounts an attractive option to save money for Indians residing abroad.

How to open an FCNR Account?

If you meet the FCNR Account eligibility, you can use the online or offline method to open an FCNR Account.

1. Select the bank you want to open your account with.

2. Decide a tenure and currency for the transaction. Remember that interest rates differ for different currencies in most banks.

3. Gather all the documents required for the application. It includes a passport, visa, proof of foreign residency, etc.

4. Complete an online application form or visit the nearest bank branch to get a physical one.

5. Your account details will be provided to you, and the access to your account will be activated.

Also Read: Which bank account should you open as an NRI?

Final Thoughts

An FCNR Account is like a Fixed Deposit where NRIs can keep their money in foreign currencies. It is opened for a fixed tenure, which can be renewed. It offers a fixed interest rate, and the interest income is non-taxable. The account also provides full reparability of the funds.

Disclaimer: This article is for information purpose only. The views expressed in this article are personal and do not necessarily constitute the views of Axis Bank Ltd. and its employees. Axis Bank Ltd. and/or the author shall not be responsible for any direct / indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision.